Switching to the
cloud computing model of buying technology as a service purely
to cut costs and speed up deployment can be a mistake.
Regulatory or legal requirements are often forgotten, and this
can expose businesses using cloud computing to unnecessary risk
says Andrew Scott, partner at law firm Dickinson Dees.
The Data Protection Act, for example, requires businesses to
control the way personal data is processed and stored, but this is
extremely difficult with cloud computing, says Scott.
It is also unlikely that businesses will have any of the control
they need over where the data is stored or have any real assurances
that no data is left behind after the contract ends.
Cloud computing service contracts, says Scott, require the same
amount of care as traditional outsourcing agreements when it comes
to regulatory compliance.
Cloud computing does not work in every context, he says, and
services have to be selected carefully with legal requirements in
mind.
This is particulary true for businesses in highly regulated
sectors such asfinancial services.
"Businesses must ensure they select only cloud computing
services that enable them to avoid risk entirely or manage it to a
reasonable level," says Scott.
Cloud computing is still animmature business model and issues
around risk and compliance still need to be ironed out.
Kelly Dempski, director of research at
Accenture Technology Labs in France, says everyone is still
trying to figure out how best to use the cloud computing model.
"We are still in the period of learning and just beginning to
come up with best practices," he says.
A lack of business process management to go with the services
offered by cloud computing is another reason businesses should be
cautious about the model.
Although companies are saving up to 40% on project costs by
deploying CRM applications using the cloud computing model, the
benefits could be short term says Michael Maoz, analyst at
Gartner
Research.
These services typically do not include help for businesses to
improve customer processes over time.
This could result in an erosion of customer satisfaction, says
Maoz, unless those using CRM services invest their own resources to
measure and manage long-term process improvements.
Businesses need to realise that being able to deploy enterprise
level applications quickly at a lower cost does not necessarily
guarantee success, says US-based management consultant John Thorp,
president of The Thorp
Network and chair of Val IT Steering Committee for the
IT Governance Institute.
The perceived benefits of the cloud computing business model are
making it a popular and likely choice, with no end of the current
economic crisis in sight, with some
surveys indicating adoption by more than 60% of businesses.
A successful outcome, says Thorp, depends on understanding what
the business wants to do with IT, selecting the right IT services,
and then making the necessary organisational changes to use that
service to achieve the desired business outcome.
Technology deployed through cloud computing may satisfy
short-term needs, but has no more chance of delivering longer term
benefit if services are not selected carefully and their use
managed properly, says Thorp.
Considering the benefits of lower cost, faster deployment and no
maintenance worries, it is clear why cloud computing is attractive
during an economic downturn.
It is equally clear that not all businesses can make use of all
computing services offered via the internet cloud without first
doing a full analysis of the implications.
Signing up to a cloud computing service without being aware of
the legal and compliance risk and without ensuring the business has
processes in place to manage, measure and use that service, could
be a recipe for failure.